The growth of severe tenant arrears has slowed however, to 1.6% claims the Tenant Arrears Tracker by Templeton LPA.
In quarter 3 of 2012, the number of tenants in arrears of more than two months grew by 1.6% on a quarterly basis. This represents a slower rate of increase than the 4.6% quarterly rise seen in quarter 2, 2012.
Following the steady quarterly rise, the level of severe arrears is 15% higher than the average for the previous 12 months.
Tenants in severe arrears represented 2.5% of tenancies in England and Wales, the same proportion as in the previous quarter.
Although severe arrears cases steadily climbed last quarter, overall tenant arrears fell slightly in August, with 9% of all rent late or unpaid, the first improvement in this measure in three months.
Paul Jardine, director and receiver at Templeton LPA, said: “Rising rents have kept the pressure on tenants’ finances, but it is tenants with the lowest incomes that are feeling the pinch the hardest.
“While the majority of tenants have shown a slight improvement in their ability to cope with the bigger rent cheques, the minority of renters who are months behind with rental payments is still expanding.”
Jardine added: “Nevertheless, it’s encouraging news for landlords that the rate of growth is slowing. The labour market has held up well recently, and if it strengthens further, it may well keep a lid on the number of tenants unable to pay the rent in the short-term.”
There was a slight reduction in the number of tenants who faced eviction through court order on a quarterly basis. In the second quarter of 2012, 25,422 tenants faced eviction notices, a quarterly fall of 6% compared to the previous quarter
However, evictions remain 8% higher on an annual basis.
Jardine said: “With significant capital gains unlikely in most regions, the onus is currently on rental income to provide the lion’s share of an investor’s annual return, not to mention pay the mortgage each month.
“In this context, many landlords have been acting earlier to resolve payment problems before severe arrears cases result in eviction processes or mortgage arrears.”
David Brown, commercial director of LSL property services, said: “Arrears management and prevention is a crucial consideration for any sensible property investment strategy.
“Landlords need to have a plan in place for identifying and tackling tenant payment problems early, or face the prospect of a property that is neither providing an income, nor able to be quickly filled. With this in mind, landlords should balance getting the best possible rental income from their property with making sure rental payments are affordable for prospective tenants in the long-term.”